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Burnley boss banned for £111k tax fraud

VAT Fraud Investigation

Burnley boss banned for £111k tax fraud

The director of a construction company has been given a 10-year ban after fraudulently claiming a £111,527 Construction Industry Scheme (CIS) payment from HMRC

Penka Vasileva ran Penka Services Ltd, a Burnley based residential construction company, which was set up in July 2019. Immediately after establishing the business, Vasileva registered under the CIS scheme as both a contractor and a sub-contractor. The fraudulent CIS payment of £111,527 from HMRC related to the tax period ending 5 February 2020.

Under CIS rules, contractors deduct money from a subcontractor’s payments and pay it to HMRC. The deductions count as advance payments towards the subcontractor’s tax and National Insurance. Contractors must register for the scheme.

The repayment from HMRC was paid into a third-party contractor’s bank account, named as company ‘y’ by the Insolvency Service.

During a subsequent investigation into the CIS claim, HMRC reviewed the bank statements of company x, another third party, but they were unable to trace any payments made by them to PSL.

HMRC also reviewed the bank statements of company y and was unable to trace any payments received from company x; it also found that company x entered liquidation on 20 December 2019.

As a result of the investigation, HMRC obtained an order to have company y’s bank account frozen on 14 July 2020.

HMRC subsequently confirmed that following a forfeiture application, it received the funds that were held in the frozen bank account.

Bulgarian national, Vasileva did not produce any accounts and records to support the CIS claim made. She has been banned from being a director of a company for 10 years from 3 August.

Penka Services was dissolved on 9 July 2022 following a voluntary winding up petition issued on 26 February 2021. The insolvency report by Begbies Traynor showed that the company owed HMRC £46,888 at the time of dissolution although the tax authority had not submitted a claim for repayment.

Tim of MS Taxes says its madness to think you would get away with such a blatantly obvious fraud. If you need any advice on the right way of doing CIS drop me a message and arrange a call with me.

#TaxInvestigationExperts #MsTaxes #CIS

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